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The top chart shows the price of an index of home equity-backed securities, while the bottom chart shows the price of an index of commercial mortgage-backed securities. Both show strong price gains, and I would note that prices have been rising since last summer. It's particularly interesting to see these price gains come at a time when the whole world is anticipating a new wave of home foreclosures and widespread distress in the commercial real estate market. These charts are saying the reality is not likely to be nearly as bad as the hype.

This also provides more confirmation that the real estate market has bottomed and may even be improving. A year ago the prices of asset-backed securities such as these were priced to Armageddon—to the expectation of truly massive defaults nationwide. Now they are priced to merely difficult conditions, but that represents a huge improvement.

These charts also suggest that asset backed securities such as the ones represented in these indices, which were marked down severely last year by many institutions because they were considered "impaired," will at some point be marked up, resulting in very welcome additions to corporate profits.